Dr Dong-Wook Song The University of Hong Kong

Dr Dong-Wook SongThe University of Hong KongAsian Container Ports:Development, Competition & Implications for Busan

Busan Development Institute

Discussion PointsReview of port development in the regionCompetition status between the portsOverview of transport logisticsStrategic Implications


Port in International Logistics and Trade International TradeTransport Logistics (international)Maritime TransportPortShipping


Implications from the DiagramTransport demand is derived not a direct, primary or final demand !Demand for maritime transport is derived particularly from international trade

At the same time, maritime transport is constrained by international logistics


World Top 10 Container Ports(Unit:: 000 TEUs)Source: Containerisiation International (March, 2004)


World Top 20 Container Ports


Regional Container Ports in AsiaSource: Loo and Hook (2002)


Major PortsFeeder PortsTanjung PelepasShenzhenBusanKaoshuingHong KongSingaporeto North Americato EuropeCompetition from adjacent PortsAsian Container Port NetworkShanghai


Committed & Planned Port Development - Northeast China -Source: Ocean Shipping Consultants (2003)

PortProjectQuay Length (metres) Annual Capacity(million TEUs per year)Completion by endTianjinContainer Terminal 3

North Basin: 5 New Berths3503503503503503503503500.3750.3750.3750.340.340.340.340.3420042005200620072008200920102011QingdaoP&O Ports Terminal- 5th Berth- Two Berths- Further Berthage4878002,8000.501.003.40200420052006-10DalianDCT- Four Berths6403200.750.37520042005


Committed & Planned Port Development - East and Southeast China -Source: Ocean Shipping Consultants (2003)

PortProjectQuay Length (metres) Annual Capacity(million TEUs per year)Completion by endHong KongTerminal 9

Terminal 103501,5601,5000.482.122.50200320042008ShanghaiPhase IIIPhase IVJinshanzui: new terminal

Yangshan Port6656656006002,0000.600.600.600.402.2012.5020022003200420082007-092010 -NingboFour Berths309.51,2000.251.3020042006-10ShenzenYantian Phase III

Shekou Phase IIChiwan 4th Berth3507003507007000.501.000.500.800.7020042005200620062004


Committed & Planned Port Development - Southeast Asia -Source: Ocean Shipping Consultants (2003)

PortProjectQuay Length (metres) Annual Capacity(million TEUs per year)Completion by endPSAEfficiency ImprovementsPasir Panjang: Phase II-2,6002,6004,8000.503.003.005.5020022005-072008-102010-PTP

KlangPhase IIFurther Phases

Westport ExpansionNorthport1,0801,0802,1606003561.901.903.800.800.402004-052009-10202020022003T. PriokJICT: new berth & other804330.200.5020032005


Committed & Planned Port Development - Korea -Source: Ocean Shipping Consultants (2003)

PortProjectQuay Length (metres) Annual Capacity(million TEUs per year)Completion by endBusanShin-Gamman TerminalPECT Terminal Expansion8263000.650.2520022006Newport(Busan)Phase I 1 Stage APhase I 1 Stage B- Full CapacityPhase I - 21,0001,000

1,20001.001.001.3752.602006200720092012-14GwangyangPhase II Stage IPhase II Stage 2Phase III1,3501,1501,4000.721.251.5620022004-052007-08IncheonSouth Harbour CT3003003000.3750.3750.375200320052008UlsanCT1,0001,0000.850.8520062011


Source: Ocean Shipping Consultants (2001)


Chart1

18.618.1

18.619.05

19.0820.42

20.0321.77

21.223.2

21.224.74

23.730.68

Supply

Demand

Year

Million TEUs

Supply and Demand (HK)

Sheet1

2000200120022003200420052010

Supply18.618.619.0820.0321.221.223.7

Demand18.119.0520.4221.7723.224.7430.68

Sheet2

Sheet3

Sheet4

Sheet5



Chart1

21.0517.04

21.717.38

22.218.54

22.219.82

22.221.18

25.222.64

33.731.17

Supply

Demand

Year

Million TEUs

Supply and Demand (Singapore)

Sheet1

2000200120022003200420052010

Supply21.0521.722.222.222.225.233.7

Demand17.0417.3818.5419.8221.1822.6431.17

Sheet2

Sheet3

Sheet4

Sheet5



Chart1

18.618.1

18.619.05

19.0820.42

20.0321.77

21.223.2

21.224.74

23.730.68

Supply

Demand

Year

Million TEUs

Supply and Demand (HK Port)

Sheet1

2000200120022003200420052010

Supply18.618.619.0820.0321.221.223.7

Demand18.119.0520.4221.7723.224.7430.68

Chart2

13.3214.9

14.9316.99

15.7819.88

18.0322.72

19.2825.27

20.1827.93

25.7841.5

Supply

Demand

Year

Million TEUs

Supply and Demand (China)

Sheet2

2000200120022003200420052010

Supply13.3214.9315.7818.0319.2820.1825.78

Demand14.916.9919.8822.7225.2727.9341.5

Sheet3

Sheet4

Sheet5



Chart1

9.759.99

11.1211.27

11.512.23

12.8413.28

13.8414.34

19.7920.55

Supply

Demand

Year

Million TEUs

Supply and Demand (Korea)

Sheet1

200120022003200420052010

Supply9.7511.1211.512.8413.8419.79

Demand9.9911.2712.2313.2814.3420.55

Sheet2

Sheet3

Sheet4

Sheet5

Forecast is forecast: forecast tends to be optimistic !!Thus, we have to seriously answer questions below - Do we have enough cargoes (or demand) ?Is the ever-expansion of port capacity justifiable or only a solution ?However, at the same time, the following facts are to be taken into account Only those ports which have enough capacity and / or proper facility can enjoy demand increased like a lottery !!!Lead time, capital intensive investment, high sunk costs .. make decision-making problems delicate and complicated.Points to be noted !!!


Asian Container Throughput by Region (Unit: %)Source: Ocean Shipping Consultants (2003)


Some Thoughts on Port Demand

Demand for shipping services is derived from international trade.

Demand for port services is derived from or subject to shipping lines decision.

Shipping demand is the second; Port demand is the third ?

Ports become a prawn in international trade !!!

* * * * *How should a port react and respond ?


Port Market DrivenTo become more price competitiveTo improve service quality To expand service rangeTo cope with increased customer's negotiation power (e.g. shipping alliances, ever-increasing vessel size)


Structural Changes in Transport LogisticsFordismPost-Fordism Economies of scale Standardisation Quantity-oriented Long trade cycle Uni-modal transport Others Economies of scope Flexibility Quality-oriented Short trade cycle Multi-modal transport Global operation Outsourcing VAL services Others


Current Development in Transport LogisticsMore logistics activities outsourcedLogistics services integrated and improvedInformation technology (IT) widely applied3PLs service scope expanded


ClientSupplierConsumerLLP or 4PL(Logistics Integrator)ShippingCompanyRailOperatorTerminalOperatorWarehouseRoadHaulerBargeOperatorInformation flow between LLP and 3PLsInformation flow in the supply chain of client


A Strategic Response from PortsThe Three Generic Strategies for creating a defensible position and outperforming competitors (Porter, 1980)

Cost leadership strategyDifferentiation strategyFocus strategy


A Strategic Response from Ports (I)


A Strategic Response from Ports (II)

Hub portFeeder port

A comprehensive market analysis is a pre-requisite !!Focus or Positioning


Strategic Options in GeneralCompetition in 1980s Win & Lose Game

Co-operation in 1990s Win & Win Game

Co-opetition in the MillenniumSelective Win & Lose GameCo-operate to Compete To identify your collaborator and competitore.g. Port alliances against shipping alliances


Source: Lloyds Freight Transport Buyer Asia (July/August, 2002)


For Competitive and Successful Port Management in the Logistics EraTo constantly cope with changing market environmentTo be global business players beyond port boundariesTo be global logistics service providers to customers To achieve economies of scale being complemented by economies of scope To focus on core competencies & outsource other logistics functionsTo be technologically innovativeTo be more commercially oriented


Concluding RemarksMaritime transport is subject to international trade and transport logistics chains.Ever-changing business environment in maritime transport and logistics is a fact of challenging as well as opportunity.New strategies are to continuously developed and implemented to be competitive and sustainable.Objective market analysis and market positioning seem a key for Busans further success


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Dr Dong-Wook Song The University of Hong Kong